Canada's Oil Sands Open Up To Chinese Investment

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Includes: BNO, CEO, CNQ, DBO, DNO, DTO, OIL, OILK, OILX, OLEM, OLO, PTR, SCO, SHI, SZO, UCO, USL, USO
by: Oilprice
Summary

Canada is inviting Chinese companies to invest in its oil sands.

Chinese firms, including PetroChina, CNOOC and Sinopec had invested in Canada’s oil sands industry between 2005 and 2012.

Earlier this year, Shell said it was selling oil sands interests to Canadian Natural Resources for around US$8.5 billion.

Canada is inviting Chinese companies to invest in its oil sands, Canada's Natural Resources Minister Jim Carr said on Thursday, after an exodus in the past few months saw international oil majors selling a total of US$23 billion worth of assets to domestic producers.

Speaking at a conference call to reporters during his trip to China, Carr said "We think there are opportunities and we laid out, along with experts from industry, what we believe to be opportunities for them," as quoted by Reuters.

"We would welcome investment from any nation that's interested in the oil sands," the minister noted, without giving details of what kind of Chinese investment Canada would see as welcome. The government is interested in discussing proposals case by case, he said.

Chinese firms, including PetroChina (NYSE:PTR), CNOOC (NYSE:CEO) and Sinopec (NYSE:SHI) had invested in Canada's oil sands industry between 2005 and 2012.

But now, with the price of oil at around US$50, which is half of what oil prices were in 2012, and Canada's oil sands one of the most expensive projects to develop, not many international companies are seeing returns from investing in new projects there.

According to GMP FirstEnergy analyst Michael Dunn, who spoke to Reuters: "It's probably a question not of investing, but whether or not they sell. Non-Canadian entities have been selling the oil sands, why would the Chinese be different?"

Earlier this year, Shell said it was selling oil sands interests to Canadian Natural Resources (NYSE:CNQ) for around US$8.5 billion as part of its strategy to focus on free cash flow and higher returns on capital and prioritize businesses such as integrated gas and deep water.

ConocoPhillips announced the sale of oil sands assets in Canada to Cenovus in a US$13.3 billion deal, while Norway's Statoil has sold its entire oil sands operations in Alberta to Athabasca Oil Corporation.

By Tsvetana Paraskova for Oilprice.com

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